"Everybody loves a comeback story," writes BlackBerry in a blog, following the company's better-than-expected quarterly results yesterday.
But this may not mean consumers can expect the company to become the BlackBerry the world once knew, say industry observers.
The Canadian company posted a narrower-than-expected quarterly loss yesterday, as the troubled smartphone maker's turnaround efforts started to pay off - fuelling hopes that John Chen, who has been at the helm of BlackBerry since November, can deliver on a pledge to return the company to steady profit.
However, says MD of World Wide Worx Arthur Goldstuck, BlackBerry's results are evidence that the company has scaled down significantly and is now operating as more of a niche business. "[BlackBerry] reported a small profit, but in a healthy context. The problem is, this isn't enough of a turnaround to make it a formidable player again in the short term, but it is enough to show it can survive."
Tech analyst Liron Segev, from TheTechieGuy.com, says the company has "lost the plot" when it comes to the mass consumer market, but has refocused its energy and is far from being out for the count. "These things tend to come in two-year cycles. Look at how Nokia was seen at one stage - as a dying company - compared to where it is now, a big brand that has been gobbled up by Microsoft."
New direction
Goldstuck says apart from its cost-trimming exercises, the company is largely being kept afloat by software. "[BlackBerry's] software proposition keeps improving from an offering point of view. In fact, the company has been on an upward trajectory since Thorsten Heinz took the reins. What we are seeing now is his legacy and strategic approach in the software area, with BBM, security and its software platform QNX."
Chen has said he believes BlackBerry's role in "the new era of computing" is "more necessary than ever", because of some of its core strengths around security. He points out the company already powers many embedded systems with its QNX operating system.
That system, notes Segev, is a critical component - although not talked about often enough - of BlackBerry. "Sixty percent of car infotainment systems run on QNX software and it is also big in the medical and military industries."
Goldstuck says the automotive industry is growing strongly and BlackBerry is well positioned in that environment. "I expect the company will become a major player in other things with its QNX as well."
As it stands, however, BlackBerry is not in a position to compete with the likes of smartphone giants Apple and Samsung - never mind emerging players like Huawei and Sony - something that is patent in the company's sales figures, says Goldstuck.
The numbers
BlackBerry's results yesterday exceeded industry forecasts, with the company's gross profit margin rising to 46.7% in the quarter from 33.9% a year earlier. The Canadian smartphone maker - tagged recently as moribund -made $23 million in net profit in the three months to May (4c a share) - compared with a loss of $84 million (16c a share) a year earlier.
Quarterly revenue dropped to $966 million from $3.07 billion a year earlier.
BlackBerry's smartphone sales continued to plunge. In Q1, it sold 2.6 million units - down from 3.4 million in the previous quarter and 6.8 million in 2014 fiscal Q1.
Excluding special items, the company drew down $255 million in cash in its first quarter, much less than the $784 million it used in the fiscal fourth quarter. Cash rose to $3.1 billion from $2.7 billion on a sequential basis, helped by the sale of real estate and a tax refund. BlackBerry's Nasdaq-listed shares closed 9.7% higher at $9.09 on Thursday.
Excluding a one-time non-cash accounting gain and certain restructuring charges, the loss was $60 million, or 11c a share. Analysts, on average, had expected a loss of 25c a share, according to Thomson Reuters.
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